Santos profit to be boosted by asset sales

Santos’s first-half profit will be boosted by gains on asset sales but the underlying figures are expected to be roughly flat on the same period a year ago as higher prices offset a dip in production.

Net income is estimated to more than double to about $430 million on the back of gains from the sale of stakes in the GLNG liquefied natural gas project to Korea Gas Corp and Total.

The market consensus for underlying net profit is at $209 million, almost unchanged from last year’s $210 million.
Santos
is due to report first-half earnings on Friday morning.

Santos last month already reported a 1 per cent gain in sales revenues for the first half to $1.1 billion even after production slid 5 per cent to 22.9 million barrels of oil equivalent. The company is relying on the start-up of several new projects this year to reach its full-year output guidance of 47 million to 50 million boe.

Santos started up the Halyard gas field with Apache in June, and is due to start up the Chim Sao oil project in Vietnam, the Wortel gas project in Indonesia and the $1.08 billion Reindeer/Devil Creek venture in Western Australia this half. A fifth new project, the Kipper gas venture off the south-east coast, is running behind schedule.

However, UBS last week warned that Reindeer gas sales volumes are likely to be below expectations initially after a delay in Citic's Sino Iron project, the main customer for the fuel.

Analysts have flagged that they will be closely watching for chief executive
David Knox
's comments on progress at the construction of the $US15 billion Papua New Guinea LNG project, and the GLNG venture in Queensland.

Also of interest will be Mr Knox's views on the spiralling environmental and community concerns about coal seam gas in eastern Australia, especially since Santos’ agreed acquisition last month of NSW CSG player Eastern Star Gas.

Related Quotes

Company Profile

Santos also has shale gas interests in the Cooper Basin, so analysts are also expected to question Mr Knox about his plans in that sector, particularly after Beach Energy’s recent booking of 2 trillion cubic feet of shale gas resources from its Cooper Basin acreage.